Tech Juice 2508: Conventional Vs Blockchain Databases, Impact on Industry 4.0

Conventional databases have inhabited almost all facets of our lives.  Hackers and corrupt elements have repeatedly demonstrated their ability for data breaches and even data corruption in traditional databases.  BITCOIN is a currency that has caught the world’s imagination and has even become legal tender in some countries using a blockchain technology-based database.   How has this been possible?  What is the difference between a conventional database and a blockchain-based database?  Lets examine.

 

   

 

 

Conventional and blockchain-based databases serve different purposes and operate in distinct ways. Let’s look at some key differences:

 

Data Structure

A conventional database uses a centralised architecture with tables, rows, and columns. Data is structured and can be modified or deleted from the front and back ends. In contrast, blockchain databases use a decentralised ledger structure, where data is stored in blocks linked together cryptographically, making it immutable.

Centralization vs. Decentralization

A conventional database is managed by a central authority (e.g., an organisation or administrator) that controls access and modifications. On the other hand, a blockchain database operates on a decentralized network, where multiple nodes maintain a copy of the database and reach a consensus on changes.

Immutability

As mentioned earlier, a conventional database allows data to be updated, modified, or deleted. On the other hand, data in a blockchain database is immutable. Once recorded, it cannot be altered or deleted; it can only be appended with new transactions.

 

 

Trust & Security

 

A conventional database requires trust in an administrator or owner to maintain security.  This makes the conventional database vulnerable to hacking or insider attacks.  A blockchain database uses cryptographic techniques and consensus mechanisms (e.g., Proof of Work, Proof of Stake, etc.) to ensure trust and security without the need for a central authority.  An example of Proof of Work in the cryptocurrency space is where BITCOIN miners solve complex cryptographic puzzles to validate a transaction.  An example of Proof of Stake is where validators are chosen based on their ownership (stake) in the network.  The blocks thus added are secured by cryptographic hashing, making it tamper-proof and resistant to cyberattacks.

 

 

Performance & Scalability

A conventional database is typically faster and more efficient for transactions due to centralised control.  Blockchain databases tend to be slower due to the need for consensus and for cryptographic verification across multiple nodes.

 

 

 

Smart Contracts:  A smart contract is a self-executing program stored on a blockchain that automatically enforces the terms of an agreement without the need for intermediaries.  Think of it as a digital contract that runs on code instead of relying on lawyers or third parties to enforce agreements. The contract terms (e.g., “Release payment when goods are delivered”) are written in programming languages like Solidity (Ethereum).   The smart contract is published on a blockchain like Ethereum, Binance Smart Chain, or Solana.  The smart contract automatically executes the agreed-upon actions when predefined conditions are met.  Once deployed, the contract cannot be altered and is publicly verifiable. 

 

For example, a loan agreement on Ethereum can automatically release funds when a borrower meets the conditions (e.g., credit score verification) without the need for a bank, reducing costs and fraud risks. 

 

A supply chain company can use smart contracts to automatically release payment when a shipment is verified as delivered.  This eliminates paperwork and ensures transparent tracking. 

 

A property sale smart contract automatically transfers ownership when payment is received without the need for real estate agents or escrow services. 

 

If a flight is delayed, a smart contract can instantly trigger compensation to passengers.  This eliminates delays and fraud in insurance payouts.

 

NFTs (Non-Fungible Tokens) use smart contracts to verify ownership and handle royalty payments for creators.  Artists and musicians can earn automatic royalties without middlemen.

There are some limitations & risks of smart contracts. If a smart contract has a bug, hackers can exploit the bug (e.g., The DAO hack on Ethereum).  Once deployed, smart contracts cannot be changed, even if there’s a mistake.  Some governments don’t recognise smart contracts as legally binding agreements.

Some popular blockchains for smart contracts are Ethereum (the most widely used and supports Solidity), Binance Smart Chain (BSC) (Faster and cheaper than Ethereum), Solana (High-speed and low-cost transactions), Cardano (Focused on security and scalability), and Polkadot (Interoperability with multiple blockchains).

 

 

Use Cases

 

Conventional databases are best suited for applications requiring high-speed transactions, structured data, and frequent modifications, such as banking systems, Customer Relationship management systems, and Enterprise Resource Planning systems. Blockchain databases are ideal for applications needing transparency, trustless interactions, and immutability, such as cryptocurrencies, supply chain tracking systems, and smart contracts.

 

Cryptocurrency:  When a BTC transaction is initiated, it is broadcast on the entire network.  It is then validated by miners through proof of work.  If validated, it is permanently added as a block to the blockchain database.  This transaction is immutable and cannot be altered as in traditional databases used by banks.  Trust is maintained through cryptographic security and decentralisation rather than relying on a central authority like a bank.  The cost we pay is that the decentralised ledger is slower, although it is transparent, immutable and does not require trust in any middleman such as a bank.

Supply Chain: A food company can use blockchain to track the movement of goods.   Each step in the supply chain (from farm to distributor to store) is recorded as an immutable transaction on the blockchain.   If a customer scans a QR code on a product, they can see its entire history: where it was harvested, the factory and time when it was processed and shipped, temperature conditions during transport, etc. No single company in the chain can alter the records, making fraud prevention and traceability more reliable when compared to traditional databases.  This is of particular importance for supplies for products that are safety-sensitive.

Healthcare: A patient’s medical history can be stored on a blockchain network, accessible by authorized doctors and hospitals. When a patient visits a new doctor, the doctor automatically retrieves the verified history without needing manual records. The data cannot be altered, ensuring accurate medical records and preventing fraud (e.g., fake prescriptions and insurance fraud). Patients maintain full control over their data, granting or revoking access as needed. Blockchain encryption prevents unauthorized access and reduces hacking risks, ensuring that the tamper-proof medical history of the patient is available.

Real Estate: A property’s history, ownership records, and transaction details can be stored on a blockchain ledger. The buyer and seller can complete the transaction digitally using smart contracts, which automatically transfer ownership once payment is verified.   There is no need for intermediaries, reducing costs and speeding up the process.  Ownership records are tamper-proof, preventing fraud and disputes.

Digital Identity Services:   A person can create a self-sovereign identity (SSI) on a blockchain.   Their identity details (e.g., passport, driver’s license, biometrics) are encrypted and stored on a decentralised ledger.  When they need to verify their identity (e.g., opening a bank account), they simply grant temporary access to their verifiable credentials, obviating the need to resubmit documents. As the blockchain is a distributed ledger, there is no central database to hack.  The data is decentralised and cryptographically secured.  Users have full control over their identity, deciding who can access their data and for how long.  Using a blockchain as a digital identity database prevents identity fraud and fake accounts.

 

Voting Systems:  Citizens need to trust election authorities to count and report votes fairly.  Voters typically cast their votes either physically (paper ballots) or electronically through a centralised government database.  Paper ballots can be lost, miscounted, or manipulated.  Electronic voting systems rely on centralised servers, making them vulnerable to hacking or vote tampering.  Voter identity verification can be inefficient, leading to fraud (e.g., duplicate voting, fake registrations).  In blockchain-based voting systems, each registered voter is issued a unique digital identity secured on a blockchain.  They cast their vote as a cryptographic transaction on a decentralised ledger.  Once submitted, the vote is immutable—it cannot be altered or deleted.  Votes are counted in real-time with full transparency, and anyone can verify the results without the need for election authorities.  Voter identities will remain private while vote integrity will be publicly available.